Hydro's underlying earnings before financial items and tax was
NOK 875 million in the second quarter, down from NOK 2,713 million
in the same quarter last year. This mainly reflected lower realized
aluminium and alumina prices and effects from the cyber-attack,
partly offset by positive currency effects.
- Underlying EBIT of NOK 875 million
- Ramp-up progressing successfully at Alunorte, Paragominas and
Albras
- Bauxite & Alumina up on increased production and currency,
mostly offset by lower realized alumina prices
- Primary Metal down on lower realized aluminium price
- Financial impact of cyber-attack estimated to NOK
250-300 million in Q2 – main impact in Extruded
Solutions
- Downstream results down on margin and volume, reflecting
softening demand
- Energy down on lower volumes
- 2019 global primary aluminium market expected in deficit,
demand growth expectations for 2019 reduced to 1-2%
Underlying EBIT for Bauxite & Alumina increased compared to
the second quarter of last year, from NOK 364 million in Q2 2018 to
NOK 415 million in Q2 2019. The results were driven by positive
effects from increased production following the lifting of the
production embargo on May 20, and positive currency effects partly
offset by a decrease in the realized alumina sales price.
“Alunorte reached 80-85 percent capacity utilization in June,
within the targeted 75-85 percent capacity utilization for the
state-of-art press filter technology. Paragominas and Albras are
also ramping up successfully. This is a great achievement by the
Brazilian organization,” says President and CEO Hilde Merete
Aasheim.
Underlying EBIT for Primary Metal declined from positive NOK 755
million in Q2 2018 to negative NOK 604 million in Q2 2019, mainly
due to lower all-in metal prices and lower margins on power sales
in Brazil, somewhat offset by positive currency effects.
“We maintain our view of a global primary aluminium market in
deficit for 2019 in the range 1-1,5 million tonnes. We take down
expected global primary demand growth for 2019 to 1-2 percent, as
we are seeing signs of weakening in some of our market segments,”
says Aasheim.
Underlying EBIT for Metal Markets improved from NOK 237 million
in Q2 2018 to NOK 299 million in Q2 2019 due to increased results
from the remelters and higher results in the sourcing and trading
activities, partly offset by negative currency effects.
Underlying EBIT for Rolled Products decreased significantly
compared to the second quarter of 2018, from NOK 212 million in Q2
2018 to NOK 75 million in Q2 2019. The result from the rolling
mills decreased, driven by lower volumes and personnel cost
increases, partly offset by positive currency effects. The Neuss
smelter result declined driven by lower all-in metal prices.
Underlying EBIT for Extruded Solutions decreased compared to the
same quarter last year, from NOK 957 million in Q2 2018 to NOK 772
million in Q2 2019. Increased cost and reduced volumes mainly
resulting from the cyberattack and a somewhat softening market,
were partly offset by higher margins.
Underlying EBIT for Energy decreased from NOK 417 million in Q2
2018 to NOK 176 million in Q2 2019. The decrease was mainly due to
lower production and lower commercial results.
The overall financial impact of the cyber-attack is estimated at
NOK 250-300 million in the secondquarter 2019, of which NOK 150-200
million relates to Extruded Solutions. At the end of the second
quarter operations have largely returned to normal.
Hydro’s "Better" improvement program will not reach its original
2019 target. This is mainly due to the production embargo at
Alunorte and subsequent production curtailments at Alunorte’s
bauxite source Paragominas and Hydro’s part owned subsidiary Albras
aluminium plant.
Hydro's net debt position increased from NOK 12.1 billion to NOK
15.1 billion at the end of the quarter, Net cash provided by
operating activities amounted to NOK 2.6 billion. Net cash used in
investment activities, excluding short term investments, amounted
to NOK 2.7 billion. During the second quarter dividends paid to
Norsk Hydro ASA shareholders amounted to NOK 2.6 billion.
Hydro's reported EBIT amounted to NOK 656 million for the second
quarter 2019, compared to NOK 2,986 million in the second quarter
2018.
In addition to the factors discussed above, reported earnings
before financial items and tax (EBIT) and net income include
effects that are disclosed in the attached quarterly report. Items
excluded from underlying EBIT and underlying net income (loss) are
defined and described as part of the alternative performance
measures (APM) section in the quarterly report.
When Hilde Merete Aasheim assumed her position as Hydro’s new
President and CEO May 8, Hydro announced its aim to lift
profitability and drive sustainability. Hydro will host an Investor
Day on September 24 in Oslo to provide more insight into these
ambitions.
Investor contactsStian Hasle+47
97736022Stian.Hasle@hydro.com
Olena Lepikhina+47 96853035Olena.Lepikhina@hydro.com
Press contactHalvor Molland+47
92979797Halvor.Molland@hydro.com
Cautionary noteCertain statements included in this announcement
contain forward-looking information, including, without limitation,
information relating to (a) forecasts, projections and estimates,
(b) statements of Hydro management concerning plans, objectives and
strategies, such as planned expansions, investments, divestments,
curtailments or other projects, (c) targeted production volumes and
costs, capacities or rates, start-up costs, cost reductions and
profit objectives, (d) various expectations about future
developments in Hydro's markets, particularly prices, supply and
demand and competition, (e) results of operations, (f)
margins, (g) growth rates, (h) risk management, and (i) qualified
statements such as "expected", "scheduled", "targeted", "planned",
"proposed", "intended" or similar.
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, these forward-looking
statements are based on a number of assumptions and forecasts that,
by their nature, involve risk and uncertainty. Various factors
could cause our actual results to differ materially from those
projected in a forward-looking statement or affect the extent to
which a particular projection is realized. Factors that could cause
these differences include, but are not limited to: our continued
ability to reposition and restructure our upstream and downstream
businesses; changes in availability and cost of energy and raw
materials; global supply and demand for aluminium and aluminium
products; world economic growth, including rates of inflation and
industrial production; changes in the relative value of currencies
and the value of commodity contracts; trends in Hydro's key markets
and competition; and legislative, regulatory and political
factors.
No assurance can be given that such expectations will prove to
have been correct. Hydro disclaims any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
This information is subject to the disclosure requirements
pursuant to Section 5-12 the Norwegian Securities Trading Act
- Q2 2019 Report
- Q2 2019 Presentation
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